The Cole report: restoring the rule of law in the construction industry

The Cole Commission has acted as a giant searchlight probing the dark underside of this potentially great Australian industry. It confirmed what policy makers had long suspected and what influential insiders knew but had always tried to deny or explain away: that the industry operates under the rule of the jungle, and there will be no improvement until the people who work in it understand that the law has to be taken seriously. Legislative, institutional and structural change will start to mean something when law breakers in this industry are charged, convicted and punished. A few salutary bars of that old song need to waft over construction sites: "I fought the law and the law won".

Late last year, in response to the Royal Commission's first report, the federal government set up the Building and Construction Industry Interim Task Force. The brief to the Task Force is to ensure zero tolerance of industrial law-breaking. It is not primarily to enforce the tax laws or the safety rules because other bodies exist for this. The Task Force is to investigate and enforce Workplace Relations Act prohibitions on coercion, unprotected strikes, strike pay, and breach of industrial agreements. So far, it has visited 300 sites, launched 50 investigations, brought three prosecutions and referred nine other matters to state police, the Australian Federal Police or the Australian Competition and Consumer Commission.

These are the first public prosecutions arising out of industrial action in the construction industry since at least the 1980s, and are the result of a public policy commitment to law enforcement not seen since the Clarrie O'Shea case in 1969 and the end of penal sanctions. Cabinet has decided to extend the interim Task Force's operations until more permanent arrangements to secure the rule of law can be established.

Although it is a criminal offence under the Workplace Relations Act to hinder workplace inspectors, the Cole report noted that no prosecutions have yet been launched despite evidence that Office of the Employment Advocate inspectors have been abused, had objects thrown at them and their property damaged. It has been common practice for the arrival of OEA inspectors to lead to work stoppages and even site invasions in a bid to thwart and demoralise an independent investigator.

One of the problems with the workplace relations system is the assumption that parties will enforce the law against each other. This works in industries where workplace parties are more-or-less evenly matched and the issues are the workplace equivalent of an argument between neighbours over the height of a fence. It completely breaks down when one side has an effective monopoly over the supply of labour and disputes resemble a family telling the house full of footballers next door that the party's over. Expecting contractors to enforce the law against the CFMEU is like expecting people in the street to make citizen's arrests, hence Cole's principal recommendations of an Australian Building and Construction Commission to investigate, prosecute and enforce the provisions of a beefed-up industry specific workplace relations act.

Cabinet will support Cole's key recommendations. First, the government will seek a separate act governing workplace relations in the construction industry providing for secret ballots before strikes, compulsory cooling off periods after extended strikes, and damages awards in the event of unprotected industrial action. Second, the government will establish a new law-enforcement agency with powers to compel witnesses to testify, bring prosecutions and enforce judgments and with sufficient on-the-ground presence to police CBD building sites. Third, the government will establish a Safety Commissioner to monitor federally-funded construction sites to try to ensure that these become industry models. Fourth, the government will insist on the application of the National Construction Code and implementation guidelines to all significant new projects which are fully or partly federally funded.

Directly or indirectly, the federal Government funds about $5 billion worth of construction projects every year and is determined to use its role as client to drive change in the industry. In essence, the National Construction Code stipulates that construction projects must take place in conformity with the Workplace Relations Act. Under the Code and implementation guidelines, the federal government will not engage tenderers whose workplace agreements and practices ensure a closed shop on site. The Task Force will have full access to federally funded sites to ensure that the law is being observed and workplace agreements complied with.

For the federal government, the issue is upholding the law and trying to tackle the "union rules" culture which is at the heart of lawlessness in the industry. For the states, the issue is whether they are prepared to refuse federal money in order to protect the closed shop. However much they might prefer different federal laws, the states ought to accept that construction projects have to comply with the law as it stands, including the law mandating compliance with certified agreements.

State Labor governments risk losing some $4 billion a year in federal building and construction grants if they side with the union movement's most militant minority. There are likely to be limits to Labor's defence of a union whose stock-in-trade is the site invasion and the demand for payment and which quietly reinstates organisers sacked for assault or perjury. Opposition senators will find it hard to brand as "ideological" the recommendations of a royal commission which spent 171 days in public hearings and pursued 11 shop stewards and 97 union officials to obtain their side of the argument.

As Justice Cole pointed out, previous attempts to reform the industry have proven ineffective despite two earlier royal commissions and numerous enquiries. Although this royal commission's investigations seem to have temporarily checked lawlessness in the industry, a campaign is emerging to extend the anarchic culture of CBD construction into regional centres and the domestic housing industry. Things will certainly be different this time if Parliament approves a permanent, well resourced watchdog with new powers, new personnel and new attitudes. Unlike previous arrangements, a new statutory watchdog with the powers of a law enforcement agency should be effective and permanent.

Some of the world's best workers should no longer have to put up with some of the world's worst industrial practices. They have a right to an honest industry where they can earn a fair day's pay for a fair day's work and expect to come home uninjured. The enduring image of this industry should not be noisy marchers replaying the ideological struggles of the 1970s and raising clenched fists against authorities they don't like. The Australian industry is capable of work which is stunningly beautiful yet intensely practical and now it needs to perform consistently on time, on budget and in accordance with law.